Germany has got some major problems, although it is the EUs largest and most powerful economy right now.
First, noticed the way Merkel has been sucking up to Putin by her objection to NATO expansion and over Georgia. This is because 43 percent of Germany?s total natural gas consumption coming from Russia. Russia has used many excuses to cutoff or raise the price of that product in the past to gain political leverage and it can do so again. Germany?s economy like almost the rest of the world is in a down turn and can hardly afford and energy crisis right now so it has to yield to Russian pressure
Germany still has an industrial/manufacturing export based economy. While it does turn out electronics, nobody talks about buying German made software or computers. They are competing with the Asian tigers while at the same time they have an increasingly aging population demanding more social services and shrinking population/tax base to finance it. Exports accounting for 45 percent of its GDP, 11 percent for the United States, 29 percent for the United Kingdom, 30 percent for Russia, 28 percent for Italy and 27 percent for France), the German economy could be severely affected by a worldwide recession that undercuts the ability of other countries to buy its products.
They have no central bank to coordinate their response to the economic crisis which unlike the US is not about subprime mortgages but Enron like accounting of bank loans to corporation and the banks overvaluing corporate assets used to secure those loans. Add to this is Balkan/Baltic overexposure. (I know the Germans like to blame the US for their crisis but the German Leadership has a long tradition of blaming others for their problems to appease the masses) Germany has announced a 70 billion euro ($95 billion) bank capitalization plan and up to 400 billion euros ($543 billion) for interbank loan guarantees and a second bailout proposal for real estate giant Hypo to the tune of 50 billion euros ($67.9 Billion). Put this up against a GDP of only about $2.5 Trillion.
Germany?s military while relatively well equipped is been in decline for years like most of Europe.
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